Hello, everyone, and welcome to GBDC's earnings call for the fiscal quarter ended December 31, 2025. Before we begin, I'd like to take a moment to remind our listeners that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts made during this call may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in GBDC's SEC filings. For materials we intend to refer to on today's earnings call, please visit the Investor Resources tab on the homepage of our website, which is www.golubcapitalbdc.com and click on the Events and Presentations link. Our earnings release is also available on our website in the Investor Resources section. As a reminder, this call is being recorded. With that, I'm pleased to turn the call over to David Golub, Chief Executive Officer of GBDC.

Hello, everybody, and thanks for joining us today. I'm joined by Tim Topicz, our Chief Operating Officer; and Chris Ericson, our Chief Financial Officer. For those of you who are new to GBDC, our investment strategy is focused on providing first lien senior secured loans to healthy, resilient middle market companies that are backed by strong and partnership-oriented private equity sponsors. Yesterday, we issued our earnings press release for the fiscal quarter ended December 31, and we posted an earnings presentation on our website. We'll be referring to this presentation during the call today. I'm going to start, as I usually do with headlines and a summary of performance for the quarter. Then Tim and Chris are going to walk you through our operating and financial performance for the quarter in detail. And finally, I'll wrap up with some observations on current market conditions and our outlook for the coming period. Let's start with 3 headlines. The first headline is that despite 4 continuing industry headwinds, GBDC had an okay quarter, not great, but solid given the environment. Adjusted NII per share was $0.38, which translates to an adjusted NII ROE of 10.2%. Adjusted net income per share was $0.25 for an adjusted ROE of 6.7% and GBDC paid a $0.39 per share distribution. So what are these headwinds? I described all 4 last quarter. First, lower base rates; second, tighter spreads, not just in our market, but across almost every credit asset class other than subprime. Third, muted M&A activity, although the second half of calendar '25 improved relative to the first half; and fourth, continued high levels of credit stress. The second headline is that we expect these headwinds to continue for some time, and we're planning for a challenging 2026. The third headline, consistent with our comments on last quarter's call, is that our Board of Directors revisited GBDC's dividend policy. And after careful evaluation and in light of the headwinds I just described, the Board decided to reset the company's quarterly base dividend to $0.33 per share or about 9% of NAV per share. We also plan to maintain the quarterly variable supplemental dividend policy going forward. We believe this change is consistent with our 4 long-standing dividend priorities: maintaining a stable net asset value over time, minimizing excise taxes over time, adjusting our base distribution level infrequently and paying as high a dividend yield on NAV as sustainable, consistent with those goals. Now I'll pass the call over to Tim Topicz to discuss operating performance in the quarter in more detail.

Thanks, David. Let's begin on Slide 4. GBDC's $0.38 per share of adjusted net investment income and $0.25 per share of adjusted earnings were driven by 4 key factors this quarter. Let me walk through each of those in turn. First, overall credit performance generally remains solid. Approximately 89% of GBDC's investment portfolio at fair value remains in our highest performing internal rating categories. Investments on nonaccrual status remained very low at just 0.8% of the total investment portfolio at fair value. This level is well below that of our BDC peer industry average. And although adjusted net unrealized and realized losses increased to $0.13 per share, they were primarily related to fair value markdowns on a small tail of underperforming borrowers at GBDC, including $0.06 per share in markdowns on equity investments in these borrowers. The second key earnings driver, GBDC's investment income yield of 10% was down 40 basis points sequentially, mostly driven by lower base rates and to a lesser extent, lower weighted average spread across the portfolio. These negative headwinds were in part offset by the third key earnings driver, a continued decline in GBDC's borrowing costs, reflecting the impact of GBDC's predominantly floating rate debt capital structure. And finally, GBDC's earnings continued to benefit from a market-leading fee structure and one of the lowest operating expense loads in the public BDC sector. Now shifting to investment activity. GBDC's investment portfolio decreased by a modest 1.5% quarter-over-quarter to $8.6 billion at fair value. We remain highly selective and conservative in our underwriting. We closed on just 3.1% of the deals we were reviewed in the quarter at a weighted average LTV of approximately 43%. We leaned on existing sponsor relationships and portfolio company incumbencies for approximately 60% of our origination volume and made loans to 18…

Thanks, Tim. Turning to Slide 7. You can see how the earnings drivers Tim just described and distributions paid in the quarter translated into GBDC's December 31, 2025, NAV per share of $14.84. Adjusted NII per share of $0.38, a $0.39 per share base distribution paid out during the quarter, adjusted net realized and unrealized losses of $0.13 per share and $0.01 per share of NAV accretion from share repurchases. Together, these results drove a net asset value per share decrease to $14.84. Turning to Slide 10. This details our origination activity for the quarter. Net funds growth defined as funded commitments and delayed draw term loan and net revolver draws less exits and sales and net of market value changes in portfolio fair value decreased by $130 million for the quarter. This was primarily due to repayments and exits outpacing funded new originations and delayed draw term loans and net revolver draws. Looking at the bottom of the slide, the weighted average rate on new investments was 8.6%, a decline of 30 basis points from the prior quarter, primarily the result of lower base rates at origination. Investments that repaid in the quarter were at a weighted average rate of 9.4%. Slide 11 shows GBDC's overall portfolio mix. As you can see, the portfolio breakdown by investment type remained consistent quarter-over-quarter with one-stop loans continuing to represent around 87% of the portfolio at fair value. Slide 12 shows that GBDC's portfolio remains highly diversified by portfolio company with an average investment size of approximately 20 basis points across 420 distinct portfolio companies. Additionally, our largest borrower represents just 1.6% of the debt investment portfolio and our top 10 largest borrowers represent just 12% of the portfolio. We believe GBDC is one of the most diversified and granular portfolios in…

Thanks, Chris. I spoke at the beginning of this call about the 4 headwinds our industry has been facing, lower base rates, tighter spreads, muted M&A and a protracted credit cycle. I want to shift now to talk about the impacts of these headwinds. There are likewise 4 I want to highlight. First, private credit ROEs have come down, including across the BDC space. By our estimates, public BDC net returns are on average about 4 percentage points lower year-over-year based on earnings reports through September 30. We've seen similar findings from consultants who cover the broader private credit fund space. Now this isn't a surprise, funds of floating rate loans are necessarily impacted by lower base rates, lower spreads and credit losses. Second impact, dispersion between good managers and let's call them not so good managers has increased. There's always been a lot of alpha in private credit. Now it's particularly high. Again, not a surprise, the overwhelming driver of alpha in private credit comes from minimizing realized credit losses and periods of credit stress put this to the test. Third impact, the headwinds have generated a lot of press, maybe not as colorful as last quarter's cockroaches, but still plentiful. And fourth, we've seen shareholders respond. We've seen shareholders respond by revaluing public BDCs and by increasing redemptions from semi-liquid BDCs. So where does the puck go from here? One of the advantages that comes with age and experience is pattern recognition. Now this moment doesn't feel exactly like prior periods, but there are some elements that ride. So I want to share my take. After a period of growth and new entrants, the private credit industry is maturing and will now, in my judgment, go through a Darwinian moment. Some firms will adapt and thrive and some won't. This isn't a bad thing. We've been here before. And in some ways, this Darwinian moment, it feels a little overdue. And it's true, we're worriors, not optimists, but this doesn't mean we're pessimist either. Based on our experience through multiple cycles over the last 30-plus years, this is actually the kind of environment where we and other private credit specialists outperform. We have a playbook for doing that. It's a playbook that served us well for decades, including through a number of periods more stressful than this one. The playbook involves being very selective when making new loans, focusing on early detection, the borrower underperformance, working with sponsors for early intervention and addressing problems proactively. Our approach, it's really all about minimizing realized credit losses and being ready to play offense as opportunities arise. We're confident that this playbook will once again serve us well as we manage through this one. With that, operator, could you please open the line for questions?

[Operator Instructions] Your first question comes from the line of Finian O'Shea of Wells Fargo.

So David, to start, the big topic, of course, is software. You're not only one of the leading private credit firms, but one of the leading early investors in software. So of course, we'll ask you about that. I know this is a tough one, but any thoughts on the recent developments from AI firms that have spooked the software market and of course, the private credit market. Do they give you concern in your software portfolio that's, of course, more enterprise SaaS-based? Maybe concern from what happened in the last couple of weeks, but also concern as to what the progress from AI might look like in a few years from now when a lot of these credits will still be on your books?

Thanks, Fin. Yes, SaaSpocalypse, let's talk about it. Look, there's a real issue here. This is not just a market tantrum. I think underlying the recent market action, there are 2 core, you can call them perspectives or insights. The first is that AI is advancing more quickly than most people expected and especially so in respect of tools that make coding easier. So this month's Plaud advances are the latest manifestation of this trend, but it's a trend. The second is that some software companies are vulnerable to AI disruption as a result of this. I'd say we agree with both of these perspectives, and we think the market is right that there are going to be winners and losers from AI. We also think everybody -- and this is implicit in your question, everybody needs to approach what's going on with AI with a bit of humility. Nobody really has all the answers here. This is a new technology, and it's been moving at a pace that even experts in the field have not expected. I want to go into more depth on who we think are going to be the winners and losers. But before I do that, I want to talk about what informs our view. And you mentioned a few elements of this. Short version, we're specialists at this. We've been investing in software companies for 20 years. We've completed 1,000 software deals over that period. We're good at this. Over that 20 years, we've had only 5 defaults. We've had 0.25% of our $145 billion of software commitments as defaulted. We've got a great team. We've got 25 dedicated professionals. We've got over 200 years of combined experience in this space across multiple credit and technology cycles. And we've approached this in a way…

Very helpful. I appreciate all that color. And I'll just keep my follow-up on the topic too. The sort of -- a lot of the inbounds come in and sort of question the loan to values, what that might mean. It looks like you and peers are still investing in software at sort of normal capital structure parameters, but that's, of course, last quarter's data and all that. Has this, I guess, I guess, for one, has it -- has this -- what we see in the public market, is there a sort of similar pause going on, whether it be on your side or the private equity side? And then kind of more importantly, if that does happen, do you think that means -- does that mean the risk amplifies like if you compare it to health care services a few years ago, where those models were dependent on sort of roll-ups to achieve their EBITDA synergies and so forth? Like is there that sort of element in software where higher cost of equity, higher cost of debt will itself be a problem?

So I think it's early right now to reach conclusions, but let's talk about a couple of different scenarios. In one scenario, it becomes meaningfully more challenging for software companies, even good software companies to access capital in the broadly syndicated loan market or the high-yield market. I'd argue that's actually a positive for private credit specialists like us because that will mean more opportunities, that will mean better pricing, that will mean better capital structures. But you're going to -- we and others will need to make choices about which transactions we think are truly resilient and which we think are not. And I'm confident we can do that. So I view that scenario, Fin, as generally a positive. There's a second scenario in which this is a blip and the market comes roaring back and we quickly revert to where we were before this latest market action began. I think that's unlikely. I think there are enough real aspects to the insights about AI risk that we're likely not to see a quick bounce back. And then the third scenario I'd point to is sort of in between. It's one in which the market becomes more, what's the right word, picky about which companies and which credits it likes and which ones it doesn't like. I think that third scenario is where the puck is headed longer term. But my guess is we're going to go through scenario 1 to get to scenario 3.

Your next question comes from the line of Ethan Kaye of Lucid Capital Markets.

Firstly, in your prepared remarks, you suggested you're planning for a challenging 2026. Just hoping you can kind of dig into that a bit. Is that more broadly -- related more broadly to the leveraged lending sector? Do you also kind of foresee some kind of budding challenges at GBDC? And is this a commentary on both earnings and credit or one or the other? Just any expansion on that comment would be helpful.

Sure. So as I mentioned in the prepared remarks, we think that the market environment right now is challenging. SOFR is down, it's probably going to go down a little more. Spreads are at pretty much a 5-year low. And while they feel like they've stabilized some, the back book is still not at the same level that the front book is at. M&A, which everybody went into this year saying, oh, this year, it's finally going to happen. We're going to see the breaking the dam. I'm still seeing a muted M&A environment. And I'd like to see more. I'm not saying it won't happen. I'm saying we haven't seen it yet. And finally, on credit, I think we are in a credit cycle. And I've been saying this now for many quarters. I think we're seeing elevated levels of credit stress in both the broadly syndicated market and in the private credit market, and everybody is working through their issues, including us. I think we're well positioned, Ethan, relative to the industry. But I think there's been a fair amount of happy talk in the industry. And I want to be very candid with you and with our investors that this is a challenging environment right now. It's harder for us to produce the ROEs that we want to be producing in the current environment than it's been in recent years. That doesn't mean that I'm not optimistic about GBDC's long-term prospects. I am. But I think part of our job is being very candid about when we're in an environment with headwinds and when we're in an environment with tailwinds.

Understood. I appreciate that. And then one other I wanted to ask a bit about the deployment outlook. I know you kind of just mentioned you're not seeing a broad recovery in M&A yet. But I guess, if you do see that, right, leverage is kind of towards the top of the range and you guys are actively buying back shares here, which looks prudent. But hoping you can give a bit of color on how you're kind of weighing these competing capital allocation opportunities in the face of maybe finite capital resources.

So I think you said it very well. We've got to balance multiple goals. And in the context of shares trading at a meaningful discount to NAV, we will continue to be active in repurchasing shares because we think that's good for shareholders. We also, in the context of portfolio turnover, we'll be looking for the best opportunities to redeploy that capital in attractive new loans. So we've got multiple things that we're going to be doing at the same time. We've got to find the right balance.

[Operator Instructions] And your next question comes from the line of Robert Dodd of Raymond James.

Hate to stick on kind of the software theme. But what do you think the risks are of sort of unknown unknowns? I mean when you lay out the case of your moats, as everybody is calling proprietary entrenched software, sticky software, proprietary data, et cetera. What are the risks that those moats turn out to be not as deep as they are perceived to be at the moment. It seems like a market-wide phenomenon that the same moats are indicated by you and your competitors. And what's the -- I mean, to put it bluntly, AI -- is AI agents are quite good at scraping data and using it from their own purposes. So proprietary data might not stay proprietary in some cases. So what are the risks you think that those moats evaporate given the pace of AI? And to your point, some of it is accelerating faster than experts would have thought a couple of years ago. Maybe it's going to be better at building bridges across those moats 2 years from now than you currently think?

So great question, Robert. And let's, again, think about this across a couple of different scenarios. So let's think about a scenario in which AI advances continue to be rapid. In those scenarios, where you have enterprise players with lots of customers, deeply embedded relationships, the risk that you -- that those companies have starts with slower growth. So the first impact that one would imagine from this would be lower equity valuations associated with lower growth trajectories. And that would be lower growth in terms of new logos, and it would be lower growth in terms of a bleeding of some existing customers. The second level of risk would be that the risk would be so significant that not only would you see it in slower growth, you'd see it in some negative growth. You'd see it in some reduction in revenues. I think, again, for good software companies, it's quite unlikely that you're going to see immediate collapse. You're going to see a melting as opposed to a meltdown. And then the third scenario would be the meltdown scenario would be AI comes up with a capability that's so strong relative to the incumbent product that it effectively replaces the incumbent product in a short period of time. I think that's the least likely of the 3 scenarios. So as we think about what's going on right now, what this argues for what my 3 buckets argue for is that we likely should be focused first on equity market reaction. And then second, on credit market reaction because in order for AI to be a real problem for credit markets, we need to see scenario 2 or scenario 3. We got to blow past scenario 1, at least in a significant number of cases.

I appreciate that color. The kind of follow-on to that point is, to your point, if it's scenario 1 and you're in these assets for -- they might be slower growing and the equity holders might lose capital, but you may have the opportunity to -- may or may not have the opportunity to get out. Would you expect going forward to do less software deals given the -- is the risk return because they still seem to be -- the ones that are getting done are still priced pretty tight, it's widening a little bit. But is that -- given the risks are potentially so outsized, would -- do you expect there to be a shift in kind of the amount of software you'd want to onboard into the portfolio over the next 5 years, call it?

So my expectation, Robert, is that the market is going to reprice risk. So it's hard to answer that question without making an assumption about how the market digests information and what that means in terms of go-forward spreads. The broadly syndicated market has repriced spreads. You're not going to see new software deals come out at the same spread levels that existing borrowers are at, where their loans are trading at 95 or 90 or 85. Market is saying those deals are underpriced. So I think it's hard to answer your question without seeing some more data about how private markets digest what's going on right now and in particular, what that means for pricing and structure and leverage in new deals. I will be surprised if Golub Capital doesn't continue to be a leading software lender. We're very good at this. We've got a deep set of relationships with the sponsors who are best in the business at this. But in terms of answering your question about a specific capital deployment goal, I think it's premature to answer that.

Your next question comes from the line of Paul Johnson of KBW.

Just sticking with software here. Can you just maybe talk about, in general, the software trends, maybe sort of like pre-AI disruption risk or kind of the disruption risk that's getting priced into the market today, I ask is the Golub Altman index or the middle market [indiscernible] index that you guys put out, I noticed that the tech sector revenue growth has kind of fell off over -- here over the last several quarters. And what has kind of been the underlying trends, I guess, broadly for that industry? And maybe kind of what's driving the slower growth there?

Sure. Thanks, Paul. It's a great question, and I think important for us all to be focused on some of those trends in addition to be thinking about longer-term AI risks. So if we look at the Golub Altman index numbers in sequence, what we see is that the technology/software area has been, over time, persistently growing faster than the rest of our portfolio. Having said that, like the rest of the portfolio, we've seen some slowdown in year-over-year growth in that sector. And if you then kind of peel back this onion some more, what we see is selectively a slowdown in bookings. And this isn't just true in the Golub Capital portfolio. I think across software in both larger companies and midsized companies, we've seen over the course of the last 2 years, some slowdown in new bookings trends. Said differently, corporate clients are moving more slowly to adopt and pay for new software products relative to the prior period. So why is that? Well, it's hard to figure out that next layer of the onion because there's actually a bunch of different reasons. Part of it is companies dealing with cost pressure. Part of it is companies digesting prior investments in tech. I don't think it's a generalized move away by corporate customers, a generalized move away from adopting new software applications and using them to improve their businesses. I think that's continuing. I think we're seeing a bit of a cyclical pattern right now where software bookings are lower than they've been. And I think that will likely come back.

Very helpful, David. I appreciate that. And maybe just last question on your portfolio at GBDC. I was wondering if you can kind of share, if possible, how much of the portfolio or of the software book is ARR-based structures? And I guess any additional color on that in terms of conversion and companies near cash flow breakeven, that type of thing? And then maybe more broadly as well, just how you think about kind of the defensive structure or the thesis around that with those types of deals kind of given the risk increasing today?

Sure. So just for those of you who are not experts, what Paul is referencing is loans called ARR loans or recurring revenue loans where the rubric for the credit underwriting is not traditional EBITDA coverage or interest coverage data. It would be more based on revenue multiples and expectation of that turning into EBITDA in a few years' time. So we were early originators of AR loans, as you know, about 10 years ago. We've actually reduced the exposure to ARR loans in recent years as pricing has gotten tighter in those loans, and we think the attractiveness of them has reduced. So the proportion of the GBDC portfolio that's in ARR loans has actually gone down meaningfully in recent years as a lot of our older ARR loans converted to EBITDA loans converted to traditional loans and as we've reduced the volume of new ones. I will look to see after this call, Paul, at what we've disclosed on this and what we can disclose, but that's the generalized trend. I do think in addition to spreads being tighter, that in an environment in which bookings trends have gone down, I think ARR loans are tougher. Not to say they're all good or all bad. This is always a situation where you need to judge individual loans on their merits, but it's a more -- it's been a more challenging space.

There are no further questions at this time. And with that, I will now turn the call over to David Golub for closing remarks. Please go ahead.

Thank you, operator. I just want to thank everybody for their time this morning. As always, if you have any questions that we didn't get to today, please feel free to reach out, and we look forward to following up with you next quarter.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.